A third seasonal peak is emerging for drinks players as wine and spirits are now flying off the shelves at Easter. Rosie Davenport reports
There has never been a better time to sell drinks. All the figures show the market remains on an upward curve, growing by a steady 13% each year. But statistics aside, the good news for the grocery industry is that it is now worth a whopping £6.3bn in the multiples and co-ops, which take the lion's share in sales terms.
Given the importance of the category, it is hardly surprising that the quality of retailing has risen accordingly.
The off-licence groups have pulled out all the stops to follow a more sophisticated route with Unwins, First Quench and Oddbins all undergoing major changes.
The multiples have also upped the ante, bringing in new designs and devices to stay one step ahead.
The Federation of Wholesale Distributors has updated its wine and beer planograms and, with a new spirits planogram, they should help independents gain margin.
Garage forecourts are playing an increasing role in convenience offers for alcohol, and video rental stores are going the same way, with Blockbuster fitting stores with chillers.
But despite the diversity of ranges and changing approaches to retailing, discounting is still relied on to get customers through the door.
"The trade is facing a dilemma about the amount of wine sold on promotion," says Sainsbury director of wines Allan Cheesman. "The Australian brands seem to be at the top of the heap on this. The issue needs to be addressed but I'm not certain what the solution is."
Unfortunately in a market where more than 88% of wines sell for under £5 a bottle, it looks like a solution is some way off.
Sally Holloway, wine and spirits buyer at Booths Supermarkets, says there is a place for discounts, but they must be balanced with category building initiatives.
"There is no doubt that good promotions are important in a very competitive sector. However, there should be important emphasis placed on merchandising to maximise profit from non-promotional lines and encourage customers to try different wines through information and tastings."
It's a similar story in the beer aisles. England might not have had its best World Cup, but those watching the action at home had plenty to cheer about when it came to the price of beer.
The price of a 24-pack of Carlsberg fell as low as £9.79, which helped it make some gains.
Keith Hogg, managing director of rival Scottish Courage, says: "Anheuser-Busch and Carlsberg-Tetley were the main winners this World Cup, but value for Anheuser-Busch was significantly behind volume as Bud entered the price deal market."
Interbrew will soon release research which is expected to predict that World Cup prices are an indication of the deals supermarkets intend to run this Christmas. "At Christmas everyone goes hell for leather for market share and I can't see any way out of it," says Safeway's head beer buyer Glenn Payne.
Steve Kitching, take home sales director of Interbrew, believes discounting is the result of both retailer and manufacturer concerns.
He says: "The key factor is the level of risk' associated with Christmas for retailers and brand owners. Christmas is a massive opportunity and it is perceived as impacting not only on share of beer for the retailer, but also on the overall share given the size of the festive shopping trolley. Beer is seen as a traffic-builder and no one wants to run the risk of getting it wrong.
"Therefore, retailers from the start intend to be competitive and have a heightened sensitivity to the activity going on around them.
"This tension is reinforced when the weather over the summer holds back category growth ­ making the festive season even more important."
Carling brewer Coors says it tries to avoid discounting but, ultimately, sometimes finds it impossible to say no. External communications manager Paul Hegarty explains: "We want to build the beer category and we believe it is in no one's interests if it is sold at bargain basement prices.
"There is one player in the market who is trying to virtually give beer away. We want to work with retailers and negotiate deals, but we are not prepared to give it away.
"We negotiate with supermarkets but we do not control the price they sell it for. We sometimes walk away from retailers saying we do not want to play."
Analysts believe the multiples are endangering the partnership they have with brewers, as well as devaluing categories. David Liston, market analyst for beverages at Gerrard, says: "Discounting is putting pressure on brewers and their response needs to be to have a product that supermarkets want to sell. If retailers are pursuing this policy of discounting, then the relationship between them is at risk."
With no light shed on any solution to the problem, Glenn has another option he would like fellow retailers to pursue.
"I would like to do one giant experiment when no one promoted beer at Christmas on the basis that if it were a hot summer no one would sell ice cream and soft drinks on promotion. So why promote on alcohol at Christmas?"

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